HopefullyInLawSchool
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Simple English definitions for legal terms
too big to fail
Read a random definition: Lord of Session
A quick definition of too big to fail:
Term: Too big to fail
Definition: When something is so important to a financial system that the government won't let it go bankrupt because it would cause big problems for the economy. For example, in 2008, the government gave money to big banks and car companies because they were too important to let fail.
A more thorough explanation:
Too big to fail
When a company or organization is so important to the economy that the government won't let it go bankrupt. This is because the consequences of its failure would be too severe for the economy as a whole.
During the 2008 financial crisis, some banks and car companies were considered "too big to fail." The government provided them with bailout funds to keep them from going bankrupt. This was because if they had gone bankrupt, it could have caused a domino effect that would have hurt the entire economy.
Another example is the airline industry. If a major airline were to go bankrupt, it could cause chaos in the transportation industry and have a ripple effect on other industries that rely on air travel.
The examples illustrate the definition of "too big to fail" because they show how the failure of a company or organization can have a significant impact on the economy as a whole. In these cases, the government steps in to prevent the failure because the consequences of the failure would be too severe for the economy.